tb05 - Chapter 5 The Behavior of Interest Rates T Multiple...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5 The Behavior of Interest Rates T Multiple Choice 1) If wealth increases, the demand for stocks _____ and that of long-term bonds _____. (a) increases; increases (b) increases; decreases (c) decreases; decreases (d) decreases; increases Answer: A Question Status: Previous Edition 2) If wealth decreases, the demand for stocks _____ and that of long-term bonds _____. (a) increases; increases (b) increases; decreases (c) decreases; decreases (d) decreases; increases Answer: C Question Status: Previous Edition 3) If wealth decreases, the demand for common stocks _____ and that of long-term bonds _____. (a) increases; increases (b) increases; decreases (c) decreases; decreases (d) decreases; increases Answer: C Question Status: Previous Edition 4) A decrease in wealth (a) increases the demand for stocks. (b) increases the demand for bonds. (c) has no effect on bond demand. (d) increases the demand for housing. (e) reduces the demand for housing. Answer: E Question Status: New Chapter 5 The Behavior of Interest Rates 131 5) If the expect return on LM stock increases from 3 to 6 percent, and the return on OP stock increases from 6 to 12 percent, the expected return of holding LM stock ________ relative to OP stock and the demand for LM stock _________. (a) rises; rises (b) rises; falls (c) falls; falls (d) falls; rises (e) remains unchanged; remains unchanged Answer: C Question Status: New 6) If the expected return on ABC stock rises from 5 to 10 percent and the expected return on CBS stock is unchanged, then the expected return of holding CBS stock _____ relative to ABC stock and the demand for CBS stock _____. (a) rises; rises (b) rises; falls (c) falls; rises (d) falls; falls Answer: D Question Status: Previous Edition 7) If the expected return on ABC stock falls from 10 to 5 percent and the expected return on CBS stock is unchanged, then the expected return of holding CBS stock _____ relative to ABC stock and the demand for CBS stock _____. (a) rises; rises (b) rises; falls (c) falls; rises (d) falls; falls Answer: A Question Status: Revised 8) If the expected return on ABC stock is unchanged and the expected return on CBS stock falls from 10 to 5 percent, then the expected return of holding CBS stock _____ relative to ABC stock and the demand for ABC stock _____. (a) rises; rises (b) rises; falls (c) falls; rises (d) falls; falls Answer: C Question Status: Revised 132 Frederic S. Mishkin Economics of Money, Banking, and Financial Markets, Seventh Edition 9) If the expected return on NBC stock rises from 5 to 10 percent and the expected return on CBS stock rises from 12 to 18 percent, then the expected return of holding CBS stock _____ relative to NBC stock and the demand for CBS stock _____....
View Full Document

Page1 / 67

tb05 - Chapter 5 The Behavior of Interest Rates T Multiple...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online